Monday 21 October - Creating Confidence In How People Are Paid

Payroll Reminder - Annual Leave

Reminder of Annual leave requirements during shutdown From 1 May 2023, many awards had updated rules inserted regarding taking annual leave during a shutdown.

A shutdown is when a business temporarily closes, such as during Christmas and New Year. It’s important to start considering now the implications for your workforce in the upcoming Christmas period, ensuring that you meet your notice and payment obligations.

The updated award rules mean:

• employers may require employees to take paid annual leave during a temporary shutdown
• employers must provide at least 28 days’ written notice of the temporary shutdown period to all impacted employees
• the requirement to take annual leave must be reasonable
• the notice period can be reduced through an agreement between the employer and the majority of impacted employees
• an employee who doesn’t have enough paid annual leave to cover the whole period can form an agreement with their employer for other options for the days not covered, such as:
• using accrued time off
• annual leave in advance, or
• leave without pay.

However, an employer cannot direct or require an employee to use annual leave in advance or take unpaid leave.

Actions:

• Check your employees’ award/agreements
• Does the employer have a shutdown period
• Talk to your business/HR team about this requirement
• Run a report to check that your employees will have enough Annual leave for the shutdown period after any planned leave

https://www.fairwork.gov.au/newsroom/news/new-shutdown-rules-for-awards

Essential management and technical skills for Payroll Professionals in 2025

As we look towards 2025, payroll professionals will need to adapt to an increasingly complex landscape. With evolving technology, regulatory changes, and rising expectations from both employees and organisations, the role of payroll professionals has never been more critical. Success in this field will hinge on mastering a combination of management and technical skills. These competencies are essential not only for ensuring accurate payroll but also for transforming payroll from a back-office function into a strategic asset for organisations.

Leadership and Team Management

The days when payroll was viewed as a solitary, transactional role are long gone. In 2025, payroll professionals will be required to step up as leaders, managing teams and collaborating with various departments like HR, finance, and IT. Effective leadership involves not just technical expertise but the ability to inspire, mentor, and drive a payroll team towards excellence.

To enhance leadership skills, payroll professionals should focus on:

• Delegation and time management: Managing payroll for hundreds or thousands of employees demands exceptional organisational skills. Leaders need to be adept at delegating tasks and managing deadlines efficiently.
• Communication and collaboration: Payroll professionals should foster strong relationships with HR and finance departments. Collaboration is essential, particularly when interpreting and applying complex regulations across different jurisdictions.
• Conflict resolution: Payroll is often the department employees turn to when something goes wrong. Strong leaders must be skilled in resolving disputes and addressing concerns swiftly, ensuring employee trust in the payroll function.

Data analytics and reporting

Payroll has evolved into a data driven function, and in 2025, professionals will need advanced skills in data analytics to provide valuable insights to their organisations. Payroll data offers a wealth of information that can inform decisions on workforce management, budget allocation, and compliance risks.

Key competencies in this area include:

• Data interpretation: Understanding payroll data beyond simple calculations is crucial. Payroll professionals must analyse data trends and present actionable insights to senior management
• Reporting skills: Advanced reporting capabilities are essential. Payroll professionals should be familiar with software tools that generate customised reports to help their organisations ensure they are compliant and make informed decisions.
• Benchmarking: Being able to benchmark payroll costs and processes against industry standards is key to identifying inefficiencies and areas for improvement.

Technological proficiency and automation

In an increasingly automated world, payroll professionals must be proficient with modern payroll technologies.? Understanding how to maximise the value from these technologies will be a vital skill in 2025.

Areas to focus on include:

• Payroll software mastery: Payroll professionals must have hands on experience with payroll software. They should be familiar with system configurations, upgrades, and troubleshooting.
• Automation and integration: Automation is reshaping payroll, reducing manual processes and errors. Payroll professionals must learn how to configure and integrate systems such as time and attendance tools, leave management systems, and compliance modules.
• Digital transformation: Payroll professionals should embrace digital transformation to streamline processes, and reduced administrative burdens.

Regulatory knowledge and compliance expertise

Staying compliant with Australia’s complex web of payroll legislation will remain a top priority in 2025. With changes in federal and state laws, payroll professionals must keep their regulatory knowledge current.

Essential skills in this domain include:

• Award and agreement interpretation: Payroll professionals must be experts in interpreting modern awards, enterprise agreements, and employment contracts, ensuring employees are paid correctly.
• Compliance audits: Regular audits of payroll processes and records are essential for avoiding fines and penalties. Payroll professionals must know how to conduct thorough compliance audits and correct any discrepancies.
• Risk management: Understanding compliance risks and taking proactive steps to mitigate them will be critical. This includes implementing internal controls to detect and prevent fraud and payroll errors.

Soft skills: Communication, problem solving, and managing confidentiality

While technical skills are critical, payroll professionals in 2025 will also need to excel in soft skills that enhance their ability to work effectively within their organisation. Payroll is a function that deals directly with employees’ financial well-being, making interpersonal skills as important as technical knowledge.

• Communication: Payroll professionals must be able to explain complex payroll issues to employees and senior management clearly and effectively. Whether it’s communicating changes in taxation or resolving a payroll dispute, having strong communication skills will help build trust and confidence in the payroll team.
• Problem solving: Issues such as payroll discrepancies, system glitches, and compliance challenges will arise. Payroll professionals should have sharp problem solving skills to address these challenges quickly and effectively, minimising disruptions to operations.
• Confidentiality and discretion: Handling sensitive employee data, from salary details to personal information, requires a high level of discretion and confidentiality. Payroll professionals need to maintain strict data protection standards and handle information with care.

As we approach 2025, payroll professionals must be prepared to expand their skills and adapt to a dynamic environment. From mastering the latest payroll technology to becoming experts in compliance and leadership, the future of payroll demands a broad set of competencies that combine technical proficiency with strategic thinking. By focusing on the key areas of management, data analytics, technology, compliance, and communication, payroll professionals can ensure they remain indispensable assets to their organisations in the years to come.

Author - Ross Heron | CEO Australian Payroll Association

Superannuation on Paid Parental Leave

On Thursday, 7 March 2024, the government announced, alongside the release of the Working for Women strategy, that from 1 July 2025 it will pay superannuation on government-funded Paid Parental Leave which will be administered by the ATO.

This legislation was passed by both houses of parliament effective 19 September 2024 and is now awaiting Royal Assent.

The employer will still continue to process the government-funded Paid Parental Leave through the payroll system as per usual, however the ATO will then process the superannuation directly to the employees’ superannuation fund.

This will apply for children born or adopted after 1 July 2025.

ICYMI: Changes to the Fair Work Act 2009 (Cth) – August 2024

A number of amendments were made to the Fair Work Act 2009 (Cth) (FW Act) which commenced on 26 August 2024.

A brief summary of the changes are set out below for those who may have missed them.

Casual employment and casual conversion

The definition of who is considered a casual employee has changed. For an employee to be considered a casual employee there must be:

• no firm advance commitment to ongoing work; and
• an entitlement to casual loading or a specific casual pay rate in a modern award, registered agreement or employment contract.

The focus is now on the employment relationship and whether it can be characterised as one in which there is a firm advance commitment to continuing indefinite work.

The casual conversion process has been updated to introduce a new ‘Employee Choice Pathway’ for employees to notify their employer by writing of their intention to change to permanent employment and lists the only reasons that an employer may refuse conversion. This replaces the previous casual conversion process which required employers to make an offer to convert to ongoing employment if the casual employee met certain conditions.

Employers must also now provide all casual employees with the Casual Employment Information Statement (available here) at the following times:

• before, or as soon as possible after, commencement of employment; and
• at twelve months of employment for small business employers; or
• at six months, at twelve months, and then after every twelve months of employment for non-small business employers.

There are now new protections for casual employees against sham arrangements if an employer:

• dismisses, or threatens to dismiss an employee in order engage them as a casual employee to perform the same, or substantially the same work; or
• knowingly makes a false statement to an individual (whether a current or former employee) to persuade or influence them to enter into a contract for casual employment to perform the same, or substantially the same work.

The maximum penalties for contraventions of the FW Act relating to sham casual employee arrangements are now:

• $93,900 for individuals; and
• $469,500 for businesses.

Right to disconnect

Employees now have the right to refuse to read or respond to contact from an employer or an employment-related third party outside of work hours, unless doing so would be unreasonable.

The following factors are to be taken into account to determine whether the refusal was unreasonable:

• the reason for the contact;
• how the contact is made and how disruptive it is to the employee;
• how much the employee is compensated or paid extra for:being available to perform work during the period they are contacted, orworking additional hours outside their ordinary hours of work;
• the employee’s role in the business and level of responsibility; and
• the employee’s personal circumstances, including family or caring responsibilities.

This right will be available to employees of small business employers from 26 August 2025.

Independent contractors

The way that the court determines who is an independent contractor has changed.

Section 15AA of the FW Act now provides that the ordinary meanings of ‘employee’ and ‘employer’ will be determined by the real substance and true nature of the relationship between the parties. This “whole of relationship test” will consider the totality of the relationship between the individual and the person including the terms of the contract and how the contract is performed.

Independent contractors who earn above the contractor high income threshold (which has been set to $175,000) can ‘opt out’ of using the whole relationship test by giving their hirer written notice. By opting out, this will mean that the relationship between the parties will be determined on what was agreed at the start of the relationship.

An independent contractor can now apply to the Fair Work Commission (FWC) if they believe their contract contains unfair contract terms and the FWC has the power to set aside, amend or vary them.

Regulated workers and road transport industry workers

‘Employee-like workers’ in the gig economy and contractors in the road transport industry will have access to minimum standards and dispute resolution with the FWC. Workplace delegates’ rights have been extended to these regulated workers.

Registered employee organisations will also be able to make collective agreements with digital labour platform operators and road transport businesses.

Information provided in this news alert is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this news alert, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

Author - Athena Koelmeyer | CEO Workplace Law

Payday Super

On 2 May 2023 the Australian Government announced that from 1 July 2026, employers will be required to pay their employees’ super guarantee (SG) at the same time as their salary and wages.

This measure is not yet law.

On 18 September 2024, the government announced further details regarding the payday super framework, including:

• Contributions of super. From the start of the measure, employers will be required to pay their employees’ SG at the same time as their salary and wages. They will be liable for the super guarantee charge (SGC) unless contributions are received by their employees’ superannuation fund within 7 calendar days of payday.
• Payday is the date that an employer makes an ordinary time earnings (OTE) payment to an employee. Each time OTE is paid, there will be a new 7-day ‘due date’ for contributions, with some limited exceptions.
• Updated super guarantee charge. Where employers fail to pay contributions in full and on time, they are liable for SGC.

The SGC will be updated and consist of:

• Outstanding SG shortfall: any contributions that remain unpaid when the SGC is assessed. The shortfall calculation will be based on OTE, creating consistency with the calculation of SG contributions. Late contributions paid by an employer before they are assessed for the SGC will reduce the outstanding SG shortfall.
• Notional earnings: an interest component to put employees in the same position that they would have been had the contributions been received in full and on time.
• Administrative uplift: an additional charge levied to reflect the cost of enforcement.
• Once SGC is assessed, additional interest and penalties may apply if the SGC liability is not paid in full.
• The SGC will be tax-deductible, ensuring the income tax consequences for paying employees’ super are consistent.
• The Small Business Superannuation Clearing House will be retired from 1 July 2026. The improvement in payroll software solutions over recent years provides employers with cost-effective and higher quality options for paying superannuation contributions more timely and accurately. The ATO will engage with small businesses ahead of time to guide them in transitioning to a commercial alternative that is fit-for-purpose for Payday Super.
• SuperStream updates. The deadline for super funds to allocate or return contributions will be reduced to 3 business days, down from 20 days. The SuperStream data and payment standards will be revised to allow payments made via the New Payments Platform and improve error messaging to ensure employers and intermediaries can quickly address errors.
• STP updates. Employers will be required to report in Single Touch Payroll both the OTE and the total super liability for an employee, ensuring the SG can be correctly identified. Some payroll software already reports both, while others only report one or the other.

Further information can be found in the Treasury Fact Sheet - https://treasury.gov.au/publication/p2024-581438

Note that this measure has not yet been legislated. The next steps for the government is to draft the legislation to effect these changes. It is anticipated that the legislation will be drafted this quarter, with additional consultation to occur during this period.

Australian Payroll Association is part of an ATO PayDay Super Working Group and we will keep our members informed as and when new information becomes available.

Interesting in becoming a member? Click Here to find out more information - Click

Professional Payroll Qualifications

Payroll is often seen as an operational necessity, quietly functioning behind the scenes. However, as the complexities of payroll have grown, so too has the recognition that it is not simply a back-office task—it is a highly specialised profession that demands expertise, precision, and a deep understanding of legislation. As such, formal qualifications have become critical to elevating the payroll profession, ensuring that payroll staff are equipped with the knowledge and skills necessary to navigate these complexities.

Why Formal Qualifications Matter

Historically, payroll was seen as an extension of HR or accounting, with minimal focus on formal training specific to the field. This view underestimates the intricacies involved in payroll, which requires detailed knowledge of taxation, superannuation, industrial relations laws, and compliance with both federal and state legislation. Payroll professionals are responsible for ensuring employees are paid correctly and on time, that taxes and superannuation are calculated and submitted accurately, and that all statutory obligations are met.

Formal qualifications, such as the Certificate IV in Payroll Administration and the Diploma of Payroll Management, provide a structured pathway for payroll professionals to develop the skills and knowledge they need to manage these responsibilities effectively. These courses are recognised by the Australian Qualifications Framework (AQF), offering assurance that they meet national standards and equipping payroll professionals with competencies that are not only relevant but also vital for career progression.

Ensuring Compliance and Reducing Risk

One of the most critical roles of a payroll professional is maintaining compliance with ever-evolving payroll legislation. In Australia, payroll legislation is complex, involving federal and state rules governing issues such as leave entitlements, payroll tax, superannuation, and termination payments. Without a deep understanding of these rules, organisations run the risk of non-compliance, which can result in significant fines, reputational damage, and loss of employee trust.

Qualified payroll professionals, having undergone formal education in payroll legislation, tax laws, and employment regulations, are far better equipped to ensure that organisations remain compliant. For example, the Certificate IV in Payroll Administration focuses on the practical application of payroll rules and regulations, enabling professionals to navigate multi-jurisdictional issues and complex payroll scenarios with confidence. A skilled and knowledgeable workforce directly reduces the risk of costly errors and legal breaches.

Enhancing Accuracy and Efficiency

Payroll accuracy is not just about getting the numbers right—it’s about ensuring that complex calculations are performed correctly, from overtime and bonuses to superannuation contributions and tax deductions. Mistakes can lead to underpayments or overpayments, both of which can damage employee morale and trust in the organisation. Moreover, errors in payroll can lead to time-consuming corrections, increasing the workload for payroll staff and lowering overall efficiency.

A well-qualified payroll professional understands how to use payroll systems effectively, perform complex calculations, and ensure that all deductions and payments are accurate. The Diploma of Payroll Management takes this a step further by equipping professionals with advanced skills in process optimisation and team management. With these qualifications, payroll staff can implement streamlined processes that reduce errors and improve accuracy, driving operational efficiency across the payroll function.

Improving Organisational Efficiency

A qualified payroll workforce can have a significant impact on the overall efficiency of an organisation. Payroll professionals with formal qualifications are trained to manage not just the technical aspects of payroll but also the strategic elements, such as reporting, data analysis, and process improvement. For instance, they can provide valuable insights into labour costs, absenteeism, and turnover rates, which can inform broader HR and business strategies.

In addition, payroll teams with a deep understanding of compliance, tax legislation, and employee benefits can work more effectively with other departments, particularly HR and finance. This collaboration leads to more informed decision-making, better resource allocation, and ultimately, a more efficient and harmonious workplace.

Encouraging Ongoing Education

The introduction of nationally recognised qualifications in payroll represents a turning point for the profession. It signals that payroll is a specialised and essential function that demands a high level of expertise. Encouraging payroll professionals to pursue qualifications such as the Certificate IV in Payroll Administration and the Diploma of Payroll Management not only benefits the individual but also the organisation as a whole. It leads to greater job satisfaction, as employees feel more competent and confident in their roles, and it promotes a culture of continuous improvement within the payroll function.

Moreover, investing in professional development can help organisations retain top talent. Payroll professionals who feel valued and supported in their career progression are more likely to stay within the organisation, reducing turnover and ensuring consistency in payroll operations.

As payroll continues to evolve into a complex, technology-driven function, the need for highly skilled and qualified payroll professionals has never been greater. Formal qualifications like the Certificate IV in Payroll Administration and the Diploma of Payroll Management are essential in ensuring that payroll staff are equipped to manage the complexities of payroll with accuracy and compliance. By investing in education and qualifications, organisations can build a more efficient, compliant, and strategic payroll function, ultimately contributing to the overall success of the business.